Weighing the Perceived Benefits of Offshore Outsourcing

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December 2003

Weighing the Perceived Benefits of Offshore Outsourcing

CIDMIconNewsletter Jennifer Linton, Web Designer, Comtech Services, Inc.

There is no escaping offshore outsourcing. Indeed, it is the hot topic currently among corporations and their employees. In its September 2003 issue, CIO magazine addresses the political aspects of this topic in “Backlash” by Christopher Koch. Koch presents the controversy surrounding negative reactions to the offshore outsourcing trend.

A major perceived benefit to moving information technology (IT) jobs offshore is decreased costs. Corporate managers continually argue that “the economy will improve, IT workers will find new jobs, opposition to offshoring of US jobs will melt, and offshore outsourcing will never mature to the point where anything but the most basic development work and maintenance will go offshore.” However, these promises have not proved true. Offshore outsourcing has already exceeded the level predicted by managers, and, as a result, people have lost jobs in the US. Many feel that “the government is not prepared to deal with the prospect of millions of highly educated, well-paid white-collar workers hitting the unemployment rolls for extended periods of time.

There is strong opposition toward the temporary worker visa programs that allow foreign companies to move employees to the US to coordinate the offshore work. Perceptions from the members of The Organization for the Rights of American Workers (“a group of displaced, angry American workers laid off”) suggest, “

[it is the] corporate greed of CEOs that is ruining the country” and “outsourcing has the potential to wipe out the middle class.” What, then, is the other side of the story?

Indeed, it’s not hard to find reasons for corporate America to be concerned about this next phase in corporate strategy and about the growth of the US economy as a whole. However, according to Koch, it is estimated that “US. companies will save up to $11 billion in 2004 by outsourcing to India and that India will purchase $3 billion in high-tech imports from the United States in that time,” benefiting the US economy as a whole. There is thus a positive side to offshore outsourcing. Koch suggests what CIOs can do to make the outsourcing process more palatable for American workers:

  • Whittle, don’t hack. Take your time and cut your US workforce through attrition rather than through layoffs.
  • Offer training. Give your staff the opportunity to become the kind of employees whose jobs won’t be outsourced offshore.
  • Find out who wants to leave. Perhaps not all employees want to keep their jobs; ask for volunteers.
  • Communicate. Tell your employees that their jobs are going to be outsourced; it is better than not telling them.
  • Don’t hold benefits hostage. Do not require that your employees train their offshore replacements to receive severance pay.
  • Lobby for curriculum changes. Help university faculty by providing information about what will make IT graduates more prepared for global competition.

After reading the article I realized how much it relates to my situation. Five years ago I decided to pursue a degree in engineering. Little did I know that when I graduated and began my search for a job as an engineer and IT professional, I would find that fewer jobs were available because they were being moved overseas. Now that I have a job as an IT professional, I frequently must rely on the help of other IT professionals. Every time I encounter a problem that is difficult to fix, I call support for assistance, just as many others do. I dial the tech support number and am eventually connected to a support technician-in India.

Offshore outsourcing is a sensitive issue for many individuals. However, according to Koch, offshore outsourcing is a logical move for corporations that won’t grow without taking risks. Ultimately, the job market will change, and as Koch suggests, “if the IT employees want to stay employed in this new era, they must be willing to accept lower wages, change jobs more frequently, relocate when necessary and consider going back to school to gain new skills.” CIDMIconNewsletter